UK employment hits a record high: the reaction

31 Jan 18:00
by
Daniel Carne

We may be only one month in but good news stories have been few and far between so far this year. That’s why we were pleased to see the Office for National Statistics (ONS) report that the number of people in work in the UK has reached a record high.

Other findings from the report, which measured the period from September to November 2018, included:

Estimated 32.54 million people in work - 141,000 more than for June to August 2018 and 328,000 more than for a year earlier.

Employment rate estimated 75.8%, slightly higher than for a year earlier (75.3%) and the highest since comparable estimates began in 1971.

1.37 million unemployed people, 68,000 fewer than for a year earlier.

Unemployment rate estimated at 4.0% and hasn’t been lower since December 1974 to February 1975.

Average weekly earnings for employees in nominal terms (not adjusted for price inflation) increased by 3.3% excluding bonuses, and by 3.4% including bonuses, compared with a year earlier.

Average weekly earnings for employees in real terms (adjusted for price inflation) increased by 1.1% excluding bonuses, and by 1.2% including bonuses, compared with a year earlier.

The number of job vacancies rose by 10,000 to a record high of 853,000.

What was the reaction?

Employment Minister Alok Sharma said to the BBC: "Our pro-business policies have helped boost private sector employment by 3.8 million since 2010, and as the Resolution Foundation's latest report shows, the 'jobs-boom has helped some of the most disadvantaged groups find employment', providing opportunities across society."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics also told the BBC: "We doubt that wage growth will be sustained over the next six months at November's strong rate. Pay settlements likely will weaken this year, as the previous year's inflation rate usually is the starting point for negotiations. Nonetheless, the labour market now looks tight enough to ensure that wage growth does not slip below the 3% mark."

Tony Wilson, director of the Institute for Employment Studies (IES), commented: “With unemployment so low, vacancies at their highest ever and EU migration slowing, there is very little spare capacity to meet employer demands. In recent years, we’ve seen more people joining the workforce from ‘economic inactivity’ – typically parents, older people and those with health conditions – but this is slowing fast, with fewer economically inactive people saying that they want a job than ever before. This lack of capacity may well be fuelling pay growth, and, in turn, may start to feed through into inflation.”

Recruitment & Employment Confederation (REC) director of policy Tom Hadley said at the time: “However the politics play out over the coming weeks and months, employers will need to continue innovating in how they hire and attract staff to fill vacancies. Recruitment professionals will play a pivotal role in finding new ways of meeting workforce challenges in high-demand sectors, ranging from engineering and healthcare to hospitality, construction and logistics.”

As we mentioned, anything positive on the news agenda is most welcome right now; however, Jeremy Thomson-Cook, chief economist at currency dealer WorldFirst, offered some perspective in the Guardian: “Employment in itself is a lagging indicator. It is slow to react to positive or negative changes in the economic cycle so, although these numbers are ostensibly for what happened in November, they are more a representation of what happened in the summer. The summer was a good time for the UK economy, and so wage and jobs numbers reflect a time of strong business confidence, heightened productivity and relative political calm. Remember that?”

Time will tell, and 2019 is shaping up to be an interesting year for all. One thing’s for certain; Henry Nicholas will continue to work closely with our clients and candidates to ensure in-demand talent is matched to the right roles. Looking to join a team that’s going places? Check out our latest vacancies and apply today.